Resolution Trust Corporation

In 1989, the nation faced a financial crisis caused by the collapse of hundreds of savings and loan associations, who had taken advantage of loosened regulations to invest aggressively in real estate and other ventures, many of which went sour. Their problem was the government's problem, too, since their deposits were guaranteed by the federal government.

Fearing both the size of the bill if the troubled institutions went under and the damage such a meltdown might cause to the economy at large, Congress and President George H.W. Bush in 1989 created the Resolution Trust Corporation to take over troubled thrifts, as the banks were known.

The mission of the corporation was to dispose of the assets as quickly as possible for maximum value. Its goal was to reduce taxpayer exposure.

Resolution Trust closed or reorganized 747 institutions holding assets of nearly $400 billion. It did so by seizing the assets of troubled savings and loans and then reselling them to bargain-seeking investors. At the peak in early 1990 there were 350 failed savings and loan institutions under the agency's control.

By 1995, the S.& L. crisis abated and the agency was folded into the Federal Deposit Insurance Corporation, which Congress created during the Great Depression to regulate banks and protect the accounts of customers when they fail. The total cost to taxpayers was later estimated at $124 billion.

The largest remaking of America's financial system was set in motion today as President Bush signed a bill that will eventually marshal hundreds of billions of dollars in support of the Government's commitment to guarantee the safety of depositors' money.

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Barry Sternlicht has been one of the downturn's busiest buyers, but his highest-profile deal has been the acquisition of the $4.5 billion real estate loan portfolio of Corus Bankshares, the largest U.S. condominium construction lender until it failed...